Scott Bessent signals support for lifting deposit insurance limits

"I'm encouraged to see emerging bipartisan support for increasing FDIC insurance limits on non-interest bearing transaction accounts," Bessent said Thursday at a community banking conference, referring to the Federal Deposit Insurance Corporation.

He added that Treasury has sought to back up efforts in Congress to "modernize" the deposit insurance system.

Currently, the U.S. government only insures bank deposits that don't exceed $250,000.

There's been bipartisan interest in recent years to overhaul deposit insurance, which briefly gained momentum in Congress after the stunning collapse of Silicon Valley Bank in 2023. At the time, the Biden administration intervened to shield depositors regardless of the amount of cash they had at the bank and prevent a cascading wave of bankruptcies.

Vice President J.D. Vance once suggested pegging insurance limits to inflation while serving as a Republican senator from Ohio.

"Everybody understands implicitly that if [JP Morgan] fails tomorrow, its depositors are gonna get a bailout from the federal government," Vance said at the time. “Clearly, a $300 million bank in southern Ohio is not going to get a bailout from the federal government.”

There is still interest on Capitol Hill for lifting the insurance limits. In July, Warren expressed support for lifting the cap on bank accounts used by businesses to cover payroll and rent.

"Raising FDIC insurance limits is a common-sense policy that levels the playing field for the small and mid-sized banks that actually lend to small businesses," Warren said.